Gold shines again on retreating T-yields

As US Treasury yields decline and the US dollar fluctuates, gold prices climb. Treasury yields’ decline supports Gold’s rise, but the US Dollar Index’s slight increase opposes it. Tuesday’s US data was mixed, with lower consumer confidence and higher durable goods orders influencing the overall market sentiment.

Although the price of gold is up, it is below the day’s highs of $2,200, previously touched ahead of the North American session namely during the overnight session due to a declining US dollar.

The dollar continued to rise at Wall Street’s opening time as US Treasury yields declined, keeping the yellow metal rising. The Gold Index (XAU/USD) is up 0.33% as of this writing, trading at $2,178.30.

The non-yielding metal faces resistance from the US Dollar Index, which is trading flat at 104.292. The US 10-year benchmark note rate did, however, decrease by one basis point to 4.243%, which helped the precious metal.

Orders for durable goods increased to a level not seen since 2022. Meanwhile, according to the Conference Board, consumer confidence fell even more in March, hitting its lowest point in four months. Also, on the data front; US Durable Goods Orders for February rose by 1.4% MoM, exceeding estimates of 1.1% and January’s -0.9% plunge. The core Durable Goods Orders stood at 0.4% MoM, up from -0.3% and above the consensus of 0.4%.

The Conference Board (CB) revealed Americans’ confidence was steady in March, yet it ticked down to 104.7 from 104.8, a downward revision from the previous month. This was blamed on higher prices and soaring borrowing costs.

Federal Reserve officials remain set to cut rates, but there’s division among the Federal Open Market Committee (FOMC) board. Atlanta Fed President Raphael Bostic noted that he expects one rate cut instead of two in 2024. Meanwhile, Fed

Governor Lisa Cook echoed Bostic’s comments and added that easing policy too soon increases the risk of inflation becoming entrenched.

Chicago Fed President Austan Goolsbee remains dovish, expecting three cuts, though he said he needs more evidence of inflation “coming down.”

Money market traders predict a 70% chance that the Federal Reserve would slash rates by a quarter of a percentage point, setting the federal funds rate (FFR) at 5.00% – 5.25%.

Gold traders are awaiting the release of the Federal Reserve’s preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) Price Index. The index is estimated to grow 2.8% YoY in February, with monthly figures expected to slow from 0.4% to 0.3% MoM.